Why You Should Get A Non Encumbrance Certificate?

What is Non – Encumbrance Certificate?

Non- Encumbrance Certificate (NEC) is a charge created on the owner’s property. It is mandatory to clear that there is no encumbrance on the property which has been kept as a security to the bank. As encumbrance itself means “without any burden”

Non- Encumbrance Certificate contains details of all the transactions makes things easier for the banks. Banks know through this certificate that the property put by an individual isn’t already mortgaged to any other banks . Now a days, banks ask for Non- Encumbrance Certificate when you apply for a home loan or going for a loan against property.

Who issues the Non- encumbrance Certificate?

This certificate is issued for a particular period like 13- 30 years. Now, who issues a Non- Encumbrance Certificate? The certificate is issued by an Executive Magistrate which is often summoned as “Tahsildar”, a tax officer. His duty is mainly to obtain taxes from a land.

What is the need of Non- Encumbrance Certificate?

We are all familiar with the term “secured loan”. In this type of loan an individual needs to attach any collateral or security in order to avail funds. Most of the banks and NBFCs provide support to such people who neither have a good credit score nor financial support. Therefore, in such a case they demand for the asset or property. However, the banks or NBFCs can be deceived by anyone and hence they demand Non- Encumbrance Certificate on up to a period of 13- 30 years. Without this certificate you will not get home loan or loan against property from any bank and other financial institution for that matter.

How to get Non Encumbrance Certificate ?

  • In the first step you ought to send an application via Form 22, this form is used to obtain Certified Copy of Sale-Deed or Encumbrance Certificate (EC) from sub-registrar office where the document is registered.
  • Your application will get a fixed non- judicial which is given by the Executive Magistrate or Tehsildar. Keep in mind that you have to mention your full residential address with a reason stating why you need the certificate which should be look realistic.
  • Do not forget to attach proof of residence which includes ration card, driving license, Aadhar Card, electricity bill and telephone bill.
  • You also need to provide details of ownership of the property in question – survey number and location of the property.
  • All other minute details of the property – including measurements also must be stated.
  • The completed application is needed to be handed over to the jurisdictional sub-registrar’s office under which the property comes along with a fee that needs to be paid annually.
  • The executive magistrate verifies the report of the property and other attached documents. Once the report has been cleared by the executive magistrate, an NEC will be issued in your name.
  • However, you require some patience because the checking process may take around 15 to 30 days.
  • Non- Encumbrance Certificate is always issued from the start of a new financial year that is from April 1st, to March 31st.

Important Points to Remember

A non-encumbrance certificate is issued in either Form 15 or Form 16. 

  • The letter is issued if the property in question doesn’t have an encumbrance during that period.
  • In case there are any charges against the property, then Form 15 is given. This form specifies the nature of charges, the registered documents with respect to the property, and also, other registration details. 
  • The certificate is always issued in the language in which the registrar maintains his or her records. These are maintained in the sub-registrar’s office. You can always ask for an English translation of the same, by paying an additional amount.
  • In addition to this online and computerised Non- Encumbrance Certificates are available which conserves you from a long documentation procedure. However, this facility is only available to seven states of India which are Andhra Pradesh, Telangana, Tamil Nadu, Kerala, Karnataka, Gujarat, Orissa and Pondicherry. For the rest of the states only a hand-written certificate can be sought.

In the end we remind you to get your Non- encumbrance Certificate before setting out to buy your dream home and reach out to your bank for a loan against property.

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